THEMATIC PARALLEL SESSION: ENERGY. Lomé, Togo 15 March 2017

Transcription

1 AFRICAN UNION THEMATIC PARALLEL SESSION: ENERGY New Ini6a6ve: Green Mini Grid Africa Strategy and Rural Electrifica6on Dr. Daniel-Alexander Schroth SEforALL Africa Hub Coordinator SPECIALIZED TECHNICAL COMMITTEE (STC) ON TRANSPORT, TRANSCONTINENTAL AND INTERREGIONAL INFRASTRUCTURES, ENERGY AND TOURISM Lomé, Togo 15 March 2017

2 Green Mini-Grids Africa Strategy Outline of Presenta6on The need for a GMG Africa Strategy, aim and objec6ves The five essen6al elements of a GMG enabling environment How to implement the Strategy

3 The Cri6cal Role of GMGs in Africa o IEA s World Energy Outlook 2015: 70% of Africans without electricity o Essen6al public services & economic development o Op6ons: grid extension, mini-grids, stand-alone systems o 40% of new power most cost-effec6ve with mini-grids o Widely available renewable energy resources versus expensive fossil fuels o Environment & development benefits = interna6onal support

4 Overcoming the Barriers to GMGs o The public sector is overextended and needs to focus on the main na6onal grid o Low growth of private GMGs market despite poten6al o Perceived investment risk mul6ple causes o Need for appropriate policy & regula6on in order to s6mulate private investment o Appropriate policy and regula6ons reduces risk and allows businesses and financiers to invest

5 Key Aim and Objec6ves of GMG Strategy.. to trigger within African Ministries of Energy and their partners a commitment to puang into place the policies, regula6ons and supports needed to create an enabling environment for private investment into GMGs across the con6nent... to arrive at mutual agreement regarding the five essen6al elements that comprise a favourable environment for GMGs; to detail the steps required in each country to put those key elements in place; and to guide countries in the crea6on of ac6on plans.

6 Cri6cal Factors for Acrac6ng Private Investment in GMGs Simplified licensing Standards to ensure quality Education of stakeholders Clear plans for ownership Integrated energy planning Financing and subsidies Long-term ops & maintenance Mapping villages & energy resources Costreflective tariffs Training to build local skills Independent regulation agency Market development plan Clear plans for grid expansion Streamlined regulations Tax reduction/ exemption No barriers to DC supply INCREASING LEVEL OF PRIORITY

7 Green Mini-Grids Africa Strategy Outline of Presenta6on The need for a GMG Africa Strategy, aim and objec6ves The five essen6al elements of a GMG enabling environment How to implement the Strategy

8 Five Essen6al Elements to Enable GMGs 1. Enact clear regula6ons and provide simple licensing procedures 2. Communicate plans for expanding main grid 3. Enact laws that allow for cost-reflec6ve tariffs 4. Undertake integrated energy planning 5. Increase the capability of government officials and service providers to implement GMGs

9 Simplified Licensing Requirements and Procedures Obtaining licences and permits for mini-grid businesses is oken problema6c. Many countries do not have specific mini-grid regula6ons. In those that do, the process of obtaining licences is oken lengthy, bureaucra6c and unclear, in some cases taking up to 3 years for a single mini-grid. In addi6on to the licences, other documents that may be required include cer6ficates of incorpora6on, land lease or ownership documents, construc6on permits, environmental and social impact assessments (ESIAs), health and safety cer6ficates, water use rights (for hydro projects), and rights of way. Many government agencies may be involved and their responsibili6es may overlap. Governments should keep GMG licensing requirements as easy and as streamlined as possible.

10 Dependable Outcomes in the Case of Main Grid Arrival Investors need to know the poten6al market for GMGs in a target country. A key element of this poten6al is the possibility of main grid extension. Government needs to communicate and regularly update main grid extension plans. Mini-grid developers and their investors need long-term certainty that their investment is protected. Poten6al GMG investors and developers need to know what steps will be taken if/when the grid arrives at a community that is already being supplied with power from a mini-grid. Government regula6on can help to reduce this risk by manda6ng one of several possible outcomes: the mini-grid could become embedded genera6on through a small PPA; the mini-grid could become a power distributor in the local market; the government could compensate the GMG developer for project assets if the mini-grid is no longer economically viable.

11 Appropriate Tariff Structures and Public Funding Tariffs for green mini-grids need to be set independently from the tariffs applied to main grid-connected customers. The tariff level for GMGs should be based on what will be affordable and acceptable to remote users, balanced with the developer s need to meet opera6ng expenses, including deprecia6on, and deliver a fair return on investment. Cost-reflec6ve tariffs are cri6cal for GMG market development, even though they are likely to be considerably higher than uniform na6onal main grid tariffs. Alterna6vely, governments and development partners can foster lower GMG tariffs by providing subsidies that offset the high ini6al capital costs and thereby reduce investment risks. Governments should introduce regula6ons allowing for costreflec6ve mini-grid tariffs, or consider providing public funding to GMGs to offset high ini.

12 Integrated Na6onal Energy Planning The installa6on of GMGs should not be considered in isola6on from other electrifica6on op6ons. When assessing how to bring electricity to communi6es not connected to the na6onal grid, all the relevant op6ons should be reviewed and the most costeffec6ve solu6on determined. All cost factors and quality of supply must be fully assessed to objec6vely determine the most appropriate solu6on. Extension of the main grid will incur a significant cost to construct the addi6onal genera6on capacity, transmission lines and substa6ons. For GMGs, the capital costs of transmission lines and substa6ons are eliminated, and genera6on and distribu6on assets are rela6vely smaller and therefore less costly. GMGs operate as part of a broader energy system, which requires considera6on of their context and all associated support structures. Government should establish a framework for future power supply by alloca6ng sufficient resources for integrated electricity access planning.

13 Increased Capability to Support GMG Implementa6on The capacity of government to understand and support the needs of GMG developers is key to successful and sustainable market development. A lack of sufficient skilled human resources will be a barrier to GMG sector growth, while government s commitment to increasing capacity will help to azract the necessary investment. Government support for the crea6on of GMG training centres, through universi6es, voca6onal ins6tu6ons, NGOs or rural energy agencies would go a long way toward developing the cri6cal mass of the human resources required for GMG market development. The local manufacture of renewable energy technologies for the GMG sector can foster job crea6on and reduce costs for GMG developers. Government should commit to support training programmes for government officials, local workforce and other GMG actors.

14 African Examples of Good Enabling Environments for GMGs Ø Mali: GMGs for energy access, integrated energy planning, policy framework, Gov t fund Ø Nigeria: Na6onal GMG policy and regula6ons, work with private sector on pilot projects Ø Rwanda: Closing in on universal electricity access, policies and regula6ons enabling GMGs Ø Tanzania: Early mover in GMG sector, 3 policy docs cover GMGs, non-regulated tariffs & license exemp6on < 100kWp

15 Green Mini-Grids Africa Strategy Outline of Presenta6on The need for a GMG Africa Strategy, aim and objec6ves The five essen6al elements of a GMG enabling environment How to implement the Strategy

16 Na6onal-level Ac6ons It is important for each country to have a na6onal policy framework for GMGs that reflects the five priori6es outlined here, while also addressing the specific needs of each country. The prepara6on and/or review of such a policy should be a priority for Government. Governments should establish and support an ac6ve forum that brings private sector operators into direct contact with Government officials, financiers and end-user representa6ves. Endorsement of this Strategy by African Ministers will signal commitment to design and implement the proposed ac6ons under the condi6ons in their own countries. By so doing, Governments will be able to take advantage of the pan-african and broader interna6onal exper6se available to support GMG ac6vi6es. Governments should define in detail the necessary work plans for implementa6on of the GMG Strategy under the condi6ons specific to their country.

17 Support Available Although the Strategy focuses primarily on ac6ons required at countrylevel, some parts of the GMG Africa Strategy will need to be implemented on a regional or Africa-wide level. One example of an Africa-wide ac6on is the Green Mini-Grids Market Development Programme (GMG MDP), implemented by the SEforALL Africa Hub at the African Development Bank, which provides GMG tools, products and services to many GMG sector stakeholders. An example includes the technical assistance provided of project developers through the GMG Help Desk (hzp://greenminigrid.se4all-africa.org/). This will be complemented in the months ahead with a second Help Desk providing TA to public sector stakeholders working toward policy and regulatory mazers. Other interna6onal development partners, such as the World Bank and the GIZ, also provide services that support the pan-african GMG sector. Regional economic communi6es (RECs) and regulator associa6ons also have roles to play in crea6ng a sustainable GMG sector.

18 hzp://greenminigrid.se4all-africa.org/

19 Statement of Government Commitment Endorsement of this Strategy by African Ministers will signal the full commitment of their Governments to design and implement the proposed ac<ons under the condi<ons in their own countries Government Ministers at this mee6ng: recognise the significant role played by GMGs in bringing universal access to electricity; welcome the opportunity to mobilize resources for GMGs in their own countries; agree to secure their Government buy-in to support na6onal GMG market development.

20 AFRICAN UNION Thank you AFRICAN DEVELOPMENT BANK Contact: Dr. Daniel-Alexander Schroth